13th Jul 2007 07:00
Premier Research Group13 July 2007 For Immediate Release 13 July 2007 PREMIER RESEARCH GROUP ACQUISITION OF ARS AND D-TARGET, AND A PRE-CLOSE UPDATE Acquisitions expand data management Oracle Clinical offering in the US and add medical device clinical research expertise in Europe Highlights: • Both acquisitions will be earnings enhancing in the first full year of integration and will be funded by new banking facilities • The acquisitions continue the Company's stated strategy of building an international business both organically and through strategically placed acquisitions • Both acquisitions are complementary to Premier Research's existing offering and offer synergies to the Group and further strengthen Premier Research's position in the international CRO market Premier Research Group plc (AIM: PRG) ("Premier Research", "Company" or"Group"), the international pharmaceutical services group today announces theacquisition of the business and assets of ARS Inc. ("ARS") for a totalconsideration of up to US$22.125 million (£11.1m) and the acquisition ofD-TARGET SA ("D-TARGET") for a total consideration of up to CHF17.0m (£6.9m). ARS ARS is a privately held full service contract research organisation ("CRO") thatspecialises in providing outsourced clinical services, including; clinicalmonitoring, data management and Oracle Clinical database services, to thebiotechnology, pharmaceutical and medical device industries. The Company isbased in Weymouth, Massachusetts USA. ARS has developed a strong industryreputation based on its data management and Oracle Clinical expertise, and hasperformed services for more than 50 companies. In the 12 months to 31 December 2006, ARS reported audited net revenues ofUS$9.2 million (£4.6m), EBITDA of approximately US$2.1 million (£1.05m) and apre tax profit of US$0.5 million (£0.25m). The value of the net assets beingacquired is approximately US$1.6 million (£0.8m). Rationale and benefits of the ARS acquisition: • ARS complements the technical capabilities and growth opportunities within Premier Research with a well-established Oracle Clinical data management and database capability • ARS is currently working with 33 customers, 28 of whom will be new customers to Premier Research • The acquisition of ARS will bring with it a significant backlog in excess of £4.1 million • ARS will also provide a strategic footprint for Premier Research to access doctors and patients within the North East territory of the US market The founders of ARS, Ajay Sadhwani and Walt Wunder, will continue with the Groupin executive positions associated with business development post acquisition. Financing the Acquisition Premier Research has agreed to pay a total consideration of up to US$22.125million (£11.1m) for the business and assets of ARS. The consideration will besatisfied by an initial cash payment of US$11.625 million (£5.8m), which will befunded out of an extension to the Group's existing borrowing facilities. Inaddition, up to US$7.1 million (£3.6m) will become payable based on achievementof revenue targets for the twelve months to 31 December 2007 and up to a furtherUS$3.4 million (£1.7m) will become payable based on achievement of revenuetargets for the twelve months to 31 December 2008. D-TARGET D-TARGET is a privately held CRO that specialises in clinical research andregulatory services for medical device, combination products and biologicsproducts manufacturers from all over the world. The Company is based in Montagnypres Yverdon, Switzerland. In addition D-TARGET also has expert staff in 12countries across Europe. D-TARGET has established a strong industry reputationin regulatory compliance services throughout Europe, helping companies tosuccessfully get their products through the CE mark approval process. This is agrowth area as more medical device companies outsource this function as theregulatory regime becomes increasingly complex. In the 12 months to 31 December 2006, D-TARGET reported audited net revenues ofCHF7.8 million (£3.2m), adjusted EBITDA of CHF2.4 million (£1.0m) and anadjusted pre tax profit of CHF1.6 million (£0.65m). The value of the net assetsbeing acquired is approximately CHF2.0 million (£0.8m). Rationale and benefits of the D-TARGET acquisition: • D-TARGET complements the existing services of Premier Research with a well-established medical device capability • D-TARGET is currently working with 53 customers, 50 of whom will be new customers to Premier Research • The acquisition of D-TARGET will bring with it a significant backlog in excess of £5.0 million • Through its network of contacts, D-TARGET will also provide a strategic footprint for Premier Research to access doctors and patients for medical device clinical trials across Europe The founder of D-TARGET, Danielle Giroud, will have a global role to develop thedevices business across the Group post acquisition. Financing the Acquisition Premier Research has agreed to pay a total consideration of up to CHF17.0million (£6.9m) for the business and assets of D-TARGET. The consideration willbe satisfied by an initial cash payment of CHF14.0 million (£5.7m), which willbe funded out of an extension to the Group's existing borrowing facilities, anda further CHF3.0 million (£1.2m), which will become payable based on achievementof revenue targets in the twelve months to 31 December 2007. The Board is confident that both acquisitions will be earnings enhancing in thefirst full year. Both of these acquisitions currently generate sufficientcashflow to cover their working capital needs, Premier Research has taken on a new £10 million term loan facility and a £6.5million term loan, which incorporates £3 million of previously drawn down shortterm debt. Additionally, the Company has negotiated a £8 million 5-yearrevolving credit facility although this will not be drawn down at this time. Allother facilities remain unchanged. Following the acquisitions the Company willhave total facilities amounting to £38.6m, which will be drawn down to theextent of £30.6m immediately following the acquisitions. The Board expects the integration of both ARS and D-TARGET to be fully achievedwithin the next 3 months. Following these acquisitions the Board does not expectto complete any further acquisitions at least until after its results for thehalf year have been released. Pre-close Update As the Company approaches the end of the first half year, the board is pleasedto report that the Group has experienced strong trading in the latter part ofthe period after the slow start that the Group traditionally experiences.Turnover for the half year is expected to be well up on the comparable periodlast year, as a consequence of the inclusion of Scirex, albeit that margins willtemporarily be lower than in previous periods as the Company has invested inattracting and retaining staff in key positions to enable delivery against agrowing order book. New business authorisations have been strong with the book to bill ratioforecast to be circa 1.3 for the half year and the total backlog currentlystanding at £70 million (excluding backlog associated with ARS and D-TARGET), upfrom £62.5 million at the end of the last financial year. Furthermore, the Groupnow has approximately £136 million of proposals under tender, up from £110million at the end of the last financial year, and the average proposal valuehas moved above £1 million for the first time. With some £26 million of the order book currently scheduled for delivery in thesecond half of the year and a conversion ratio running at 30% on the pipelineproposals, mostly for delivery in the next 18 months, the board remains veryconfident of delivering results in line with consensus forecasts for the fullyear. Commenting on the acquisitions of ARS and D-TARGET, Dr Simon Yaxley, ChiefExecutive of Premier Research said: "We are delighted with both acquisitions. They clearly represent a furtherimportant step in our strategy of building a leading international contractresearch organisation. We are particularly pleased to have been able tostructure the acquisitions to enable us to use debt facilities at this time. These two acquisitions have many key attributes in common including excellentindustry reputation, top quality staff, a complementary customer base and astrong order book, giving high visibility of future earnings. As with allprevious acquisitions since the Company's IPO, these acquisitions are expectedto become earnings enhancing within the first full year. Importantly, I believe that both acquisitions offer a number of complementarysynergies to the enlarged Group and further strengthen Premier Research'sposition in the international CRO market." Premier Research Group plcDr Simon Yaxley, Chief Executive Tel: 01344 458300Peter Kyle, Chief Financial Officer Tel: 01344 458300Bernard Gallagher, Chief Development Tel: 01344 458300Officer Buchanan Communications Tel: 020 7466 5000Lisa Baderoon / Rebecca Skye Dietrich email: [email protected] Evolution SecuritiesSimon Leathers Tel: 020 7071 4300 Notes to editors: About Premier Research Premier Research is a growing CRO involved in the design and execution ofclinical trials (Phases II-IV) on behalf of pharmaceutical and biotechnologycompanies. Premier is established in three core therapeutic areas - oncology,CNS (central nervous system) and anti-infectives - with a strong underlyingexpertise in paediatrics. Through a focused approach to clinical management, theCompany has built a reputation with its customers for delivery of its services.Premier has also established itself as an active participant in theconsolidation activity within the sector. About ARS The business is a CRO that specialises in clinical data management and OracleClinical database services for the pharmaceutical, biotechnology, and medicaldevice industries. ARS has 61 employees. ARS was originally established in 1998 as a clinical research consulting firmfocused on clinical monitoring and data management activities. Since itsfounding, the company has leveraged its success in clinical data management togrow and evolve ARS into a full service CRO. The company has shown consistent and strong revenue growth given itsproject-based business model and has nearly doubled revenue in the past twoyears. About D-TARGET The business is a CRO that specialises in clinical research and regulatoryservices for the medical device, combination products and biologics productsmanufacturers. D-TARGET has 44 employees. Founded in 1997, D-TARGET is located between Geneva and Zurich, Switzerland.D-TARGET assists it's customers in bringing their products to the internationalmarket by offering high-level expertise in managing all aspects of medicaldevice, combination products and biologics products (tissue engineering)development. From inception, D-TARGET has focused its services on the medical device industryand has developed the specialised expertise necessary to service thesecustomers. The company is also a European Union authorised representative andhas developed a web-based regulatory intelligence centre to both assist andattract customers. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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